Time To Buy Euros? Not Yet

Lower 10 year Treasury yields drove the greenback lower against most of the major currencies. Existing home sales also fell more than expected as supply dropped by the biggest amount ever. Homeowners are snapping up homes quickly while potential sellers delay listings which combined has driven the median price of an existing home sold to its highest level ever. New home sales are due for release tomorrow. After passing the $1.9 billion stimulus package, President Biden is preparing a multi-part $3 trillion infrastructure spending plan that will be financed in part by higher taxes. More details will follow in the coming weeks and investors need to keep an eye on these developments because tax hikes could threaten the equity market rally.

While the euro traded higher, GBP/USD ended the day unchanged after bouncing off the 50-day SMA. This week is a big one for the currency with labor market, inflation, PMI, and retail sales figures due for release. Improvements are expected all around but the central bank’s cautiousness has made investors reluctant buyers of the currency. Tomorrow’s jobs report could change their minds. According to the PMIs, the manufacturing sector reported it’s the quickest pace of job growth since June 2018. The construction sector reported the fastest since March 2019 and while services employment continued to decline, the pace slowed. The Australian and New Zealand dollars participated in the rally but the Canadian dollar fell for the third day in a row.

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